Financial services outsourcing has proven to be a boon to many businesses. The manufacturing sector has realized the benefits of outsourcing accounting services to a greater extent in recent times. The concerns of accounting for the manufacturing firms are unique. It ranges from the calculation of procurement costs of the resources, transportation costs, labor costs to product profitability calculations. One of the major hurdles is to price the product competitively. Every process and technology add to the cost of production. The finance division of a manufacturing company must have a greater awareness of all the processes involved.
Besides the few accounting concerns mentioned above, some issues will be specific to some manufacturing companies. The excise duty of certain products or resources varies. Similarly, the production time periods vary for certain products. The outsourcing of accounting services for manufacturing industry is without a doubt challenging. The expertise and vast experience of the team at Diligen have, repeatedly, provided delightful accounting services to their manufacturing sector clients.
I. Accounting Services provided for Manufacturing Companies
There is a bouquet of accounting services the Manufacturing Companies can choose from. It is possible to customize the services to meet the manufacturing firm’s requirements as well. The accounting services help the manufacturing companies,
- to identify and utilize the growth opportunities,
- adopt the most beneficial business practices,
- provide updates on the regulatory factors, etc.
Some of the different accounting services provided for manufacturing services are:
- Accounts payable services
- Accounts receivable services
- Payroll management
- Tax advice and filing
- Resource and inventory financial management
- Support in product profitability calculations, etc.
The core function of a manufacturing company is production, and though accounting is much needed, it is a non-core function. So, it is a possibility that it might not meet the tasks with the importance it deserves. Manufacturing companies can make use of the expertise of financial service providers to avoid this situation. Hence, it is imperative to look into the benefits of accounting services for manufacturing firms.
II. Benefits of Outsourcing Manufacturing Accounting Services
1. Economic gain
The cost incurred for an outsourced accounting service will be much less when compared to that of an in-house accounting team. This will decrease the operating cost and increase the fund flow to the needed areas. The pricing of the end product is a major concern for manufacturing companies, but it depends on various factors. The procurement and allocation of resources, streamlining of processes, updating of technology, etc are some areas of importance. The decrease in the cost of non-core functions will help in the overall reduction of cost.
2. More focus on Core Functions
As mentioned earlier, the accounting functions are essential but as a support function. So, by outsourcing non-core functions to competent service providers, the manufacturing companies can divert the focus to the core areas of production.
3. Accessibility to top-class talents
The cost of hiring top-class talents is high-sky. Hence, it is always not economically workable to hire top talents for non-core functions. Outsourcing of accounting functions gives top talent service at a lesser cost.
4. Accessibility to improvised Accounting Tools
The manufacturing process involves the use of technology. The investment in technology will be primarily to streamline the assembly line process. The updating of accounting tools is expensive. Financial service providers will have the latest accounting tools. Again, outsourcing will give accessibility to the latest technology at an affordable price.
5. Six Sigma Accounting
Six sigma accounting is a holistic approach to increase efficiency by eliminating non-value-added steps. Six sigma is a method followed by various industries and especially by manufacturing companies. The detection and elimination of unwanted processes will increase the quality of products and decrease the cost. The six-sigma method, if applied effectively in accounting processes, will reduce the operating cost. And also, this will help in avoiding duplicating of reports and unwanted steps in accounting services. The financial service providers instill good accounting practices in their client’s businesses.
6. Quality is a priority
The accounting service providers will never compromise on the quality of the reports or in the timely deliverance of the same.
In the words of John Ruskin, the famous English writer, “Quality is never an accident, it is always the result of intelligent efforts.”
The Financial service providers are aware of the reputation risk attached if they compromise on the quality. Also, they assure timely deliverance of reports and reminders to pay taxes or excise duties.
7. Reduce the risk
Tax and compliance management involves risks. The financial service providers correctly update the changes in rules, regulations, and timelines. In addition, they will provide multiple reminders to make sure the firms never miss the payments. Hence, the risk of non-payment is almost nil.
The team at Diligen understands the importance of increasing process efficiency by reducing time and non-value-added processes. The six-sigma method, primarily followed by manufacturing companies, is adopted in accounting processes as well, to give top-class service to their clients. Moreover, They provide customized services according to the need of the client keeping in mind these priorities.